Century- time to take some profit

Results Update

Century has just announced its results for QE30/9/2009. Its net profit increased by 124% q-o-q or 184% y-o-y to RM8.8 million while turnover increased by 43% q-o-q or 53% y-o-y to RM67.3 million.


Table 1: Century's 8 quarterly results

From the chart below, we can see that Century's top-line has surpassed the high of RM46 million recorded in QE31/12/2007. Bottom-line is slightly below the high achieved in QE31/3/2008. Profit margin been eroded due to competitive pressure.


Chart 1: Century's 14 quarterly results

Valuation

Century (closed at RM1.96 yesterday) is now trading at PE of 10.3 times (based on last 4 quarters' EPS of 19 sen). At this multiple, Century is about fairly valued. Compared this to the port operator, NCB which trades at a PE multiple of 10.9 times (based on its closing price of RM3.18 yesterday & EPS of 21.9 sen for 9-month ended 30/9/2009).

Technical Outlook

Century has a strong rally from a low of RM0.68 in March. It has recently surpassed the horizontal resistance of RM1.90 & is now knocking against the psychological RM2.00.


Chart 2: Century's weekly chart as at Nov 19, 2009 (Source: Quickcharts)

Conclusion

After rising nearly 200% over the past 6 months to a price level close to its fair value, Century may be due for some profit-taking. As the technical outlook is still positive, the profit-taking can be carried out slowly.